Monday, February 22, 2010

About Candidates for Hire

image This article was written by Bern Lefson, SCORE Orange County Management Counselor

As the use of social networks expands, it is tempting to use such sites for finding information about potential hires. This is enticing to small businesses due to its low or non-cost. It is a useful source of information if used properly. One can ascertain questions that are legally permitted that may assist in making the hiring choice.

However, there are pitfalls out there for the small business owner who ignores the federal and state statutes that are applicable to hiring employees. This is because these sites contain information about job applicants that employers would not be permitted to ask about during a job interview. Using, and in some cases, simply accessing these pages for employment purposes can result in violations of various anti-discrimination statutes, privacy laws, and federal and state Fair Credit Reporting Acts.

Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act and the Americans with Disabilities Act -- as well as several state statutes prohibit employers from inquiring or basing employment decisions, including hiring, on factors such as race, sex, age and disability respectively. an applicant's Facebook page may disclose that an applicant is gay or a lesbian (protected under Title VII), that he or she suffers from a mental disability (protected under the ADA) or reveal an applicant's marital status (protected under California statute) -- all of which are unlawful characteristics for an employer to base employment decisions on.

A cautionary word on just exploring such sites; employers who screen these sites may be providing rejected applicants with a basis for alleging that an employer's decision not to offer them a job was due to a protected characteristic that was clearly visible through the site.

Using a third party to check on a candidate’s background is a good thing if the third party abides by the various statutes that regulate privacy. The Fair Credit Reporting Act (FCRA) governs how employers may use consumer reports procured by consumer-reporting agencies for employment purposes (hiring, promotion, reassignment decisions).

If the owner uses consumer-reporting agencies that research social-media Web sites such as Facebook to conduct investigations of applicants, that owner could be subjected to liability if the applicant was not informed of the search and failed to give written consent.

While the information available online may be very appealing, in light of the potential risks associated with using social-networking sites to screen applicants -- including the fact that the information might not even be accurate – small business owners should carefully weigh the benefits of obtaining information from these sources against the harm of potential employer liability. As stated before, using such information to ask legally proper questions may be the sound way forward.

Start Up and Beginning Business Topic: California Ups the Price of Not Issuing 1099s

clip_image002[1]This article was written by Dick Ginatty, CPA

Businesses that utilize independent contractors who provide services in excess of $600 per year are required (and have been) to issue form 1099 by January 31st of the next year. There has always been a penalty for non compliance but California recently substantially increased the penalty for non compliance.

The Franchise Tax Board may disallow a deduction for amounts not reported on a 1099. This may result in large dollars of legitimate deductions being taken away. Prior to this the deduction was still granted but you had to pay a fine.

Thank God, it is not too late for 2009. As stated above the due date for the 1099s is January 31st but the transmittal form (Form 1096) to the federal government is not due until the end of February. Therefore, there is still time to review your reporting in this area and make up any deficiencies. Penalties for non compliance are assessed by the Federal government and are based on the amount of time that has passed since the due date. After August, the penalty rate is $50.00 per 1099.

By the way QuickBooks can print both the 1099 and the transmittal form (1096) for you.

Good luck and here’s hoping it “all adds up” for you.

If there is any area in accounting or tax that you think needs to be addressed in this column please e-mail me at and if it is of general interest, I will address it in future columns.

So You Think You Can Sell?

image This article was written by Barry McKinley, SCORE Orange County Management Counselor

As the owner of a business you may be thinking this topic doesn’t affect me. You would be wrong! You need to be selling to your customers, vendors, banks, landlords, employees and even family.

You are the example that your staff will follow. How would you able to hire, motivate, promote, compensate and evaluate if you don’t have the tools to measure bad, good and excellent salespeople.

My experience in business over 35 years dealing with small business owners is that they are not good salespeople. Many think that the “good conversationalist makes an excellent salesperson.” That person is normally way too busy talking about themselves and their accomplishments to ever hear or understand their customers’ needs.

Following are just a few traits that can make a top producer:

A personality that makes people want to get to know them . . . .

This is almost indefinable. It may be about a smile, an approachable attitude and excitement for what the salesperson is selling. You will sense success and confidence when the salesperson walks into the room. They show a personal energy in their walk and enthusiasm in sharing and listening.

A work ethic that allows them to function independently without constant reminders about what to do next . . . .

Being a salesperson can be lonely. They are constantly entering new and strange environments. In many cases they may be the uninvited visitor. They need to be a self starter and able to think “outside the box”.

Be able to keep their promises . . . .

They have to understand the importance of a customer and what the customers can mean in generating a positive image in the marketplace. When they tell someone they are going to do something, it will be done! Accepting or allowing anything less weakens your company and its image.

They do not work for the company but with the company . . . .

They do not see their role in the company as any more important than anybody else’s. They are part of a team. They recognize that any weak links in the team could and probably will affect sales and ultimately their earnings. They should be ready willing and able to do whatever is required to insure the customers concerns are met and company satisfaction is established. They accept responsibility and blame and do not direct it away from themselves or point the finger at other employees or departments within the company.

Rejection . . . Not the end of the road . . . .

This is probably the single biggest fear of any new salesperson. Good ones realize that this is part of the job and to understand clearly the rejection and then pursue a sales approach to overcome it. The rejection could have been caused by a bad experience with a competitor or another sales person. The strong sales person realizes the challenge of rejection and works harder to overcome. These skills can be learned and improved on through “role playing”.

Know your product/service and your competitors . . . .

The top producer is able to offer solutions by fitting the company’s products and services to the customer’s needs. They are able to professionally probe customers to establish their requirements. They will know the competition strengths and weakness. They are able to deliver the sales message to the customer without “Information Dumping”.

As the owner of the business you must constantly strive to sharpen your selling skills and be able to instill confidence and direction in your sales force. Remember you may have only ONE opportunity to impress and sell a new customer. Growth is the survival of any business!

The Five Whys

clip_image002This article was written by Jack Revelle SCORE Orange County Management Counselor

The Five Whys is a technique for discovering the root cause (or causes) of a problem by repeatedly asking the question, “Why?” Five is an arbitrary figure. You never know exactly how many times you’ll have to ask “why.” The Five Whys technique helps to identify the root cause(s) of a problem and see how different causes of a problem might be related

To begin, the problem should be described in very specific terms.  Then, ask “why” it happens.  If the answer doesn’t identify a root cause, then ask “why” again.  The root cause has been identified when asking “why” doesn’t provide any more useful information. Continue asking “why” until the root causes have been identified. This can take more or less than “five whys.”

Remember, always focus on the process aspects of a problem rather than on the persons involved.  Finding scapegoats doesn’t solve problems!

Here’s an example. A program office wanted to find out why they missed their Initial Operating Capability (IOC) date.

We missed our IOC!

Why? Our contract delivery schedule slipped.

Why? There were a lot of engineering changes.

Why? The contractor didn’t understand our initial requirements.

Why? Our technical data package wasn’t prepared very well.

Why? We only took one week to prepare it.

At this point, the group recognized poor requirements planning as a root cause of their problem. As a result, they decided to allow more time up front in the planning process for requirements analysis.

Suppose you hear the following statement: “We used to have a respectable defect rate; it ran about 100 defects per million opportunities (dpmo). Then, a few months ago, it doubled to about 2000 dpmo.”

Using the Five Whys technique, the subsequent discussion might go something like this:

Q: Do you have any ideas why the big increase in the defect rate?

A: I’m not sure, but it could be a couple of things. For example, it might be the new materials that our new supplier is sending us, or it could be the higher conveyor speeds that we have to run on the line in order to meet the new production goals.

Q: What do you think it is?

A: I think it might be a combination of the new materials and the higher conveyor speeds?

Q: Why do you think that’s the reason for the higher defect rates?

A: Well, we used to run higher speeds on a job we had a few years ago, and from time to time the defect rate would jump up and then come back. We were never absolutely sure why.

Q: How about the new materials? Why do you think that they may be contributing to the increase of the defect rate?

A: It’s nothing official yet, but we’ve heard that the new supplier has been cutting corners and the quality of the new materials we’ve been receiving from them is questionable.

Q: That all sounds pretty interesting, but why do you think that it might be a combination of the material quality and the higher conveyor speeds?

A: It’s the timing. The defect rate didn’t really jump up when the conveyor speeds increased, but it did when the new materials entered the line.

Q: What can we do to find out for sure?

A: We can use a Design of Experiments (DOE) to figure out if the interaction between the new materials and the conveyor speeds are really why the defect rates have increased.

Ask “why” five times to determine the root cause.

1. Why is this machine not running?

Because its drive belt is broken

2. Why is its drive belt broken?

Because the drive gear was not turning fast enough

3. Why was the drive gear not turning fast enough?

Because the drive shaft’s lubrication reservoir ran empty

4. Why did the drive shaft’s lubrication reservoir run empty?

Because the PM for this machine is overdue by almost 2 weeks

5. Why is the PM for this machine overdue by almost 2 weeks?

Because the lubrication maintenance person is on a 2 week vacation

6. Why didn’t someone else cover for the lubrication maintenance person during his vacation?

Because we do not have a vacation coverage plan for the maintenance department, and operators are not trained and empowered to do lubrication.

Sometimes you have to ask “why” more than five times to get to the root cause.

Women in Business Breakfast Series

clip_image001[1]This article was written by Martha Ryan, SCORE Orange County Management Counselor

The next meeting of The Woman in Business Breakfast Series is set for March 12, 2010 from 8:00AM to 10:30AM at The Center Club located at 650 Town Center Drive in Costa Mesa. Parking is free – see the valet located just past the ticket office for the OC Performing Arts theatre. Our featured speaker will be Sabrina Gibson, Orange County CEO and author, who will share her thoughts on how to maximize Social Networking as a dynamic marketing tool. You won’t want to miss this great opportunity to gain new insights for managing your business and share ideas, experiences, and advice with other women in a variety of service and product businesses.

For more information, and to register for the meeting, please access our website at